Reference no: EM132206484

ASSESSMENT

1) Is it possible for a company that has negative net income, negative operating cash flow, and negative free cash flow to end the year with an increase in cash and an increase in stock price? Explain your answer. (Please write between 300-500 words)

2) The manager of Golden Ray Corporation receives a bonus if company profits exceed $1,000,000 this year. During the final week of the year, the manager changes an accounting policy that will increase reported profits from $950,000 to $1,025,000, triggering his bonus. The change in profits of $75,000 will reverse itself in the next year, and the accounting change has no impact on Golden Ray's cash flow. Discuss the above situation as it relates to both an agency problem and efficient markets. (Please write between 300-500 words)

3) Documents uncovered after the Exxon Valdez oil spill in Alaska revealed that Exxon could have used double-hulled oil tankers that would have prevented the spill, but the cost of refitting their fleet of single-hulled tankers was considered too high. Exxon determined that the cost of cleaning up an oil spill would be less than the cost of refitting the ships, thus increasing shareholder value. Several years after the oil spill, however, Exxon was fined billions of dollars for the spill. How do the costs of the cleanup and the fines pertain to a discussion of maximizing shareholder value and social responsibility? (Please write between 300-500 words)

4) Based on the information in the Table below, prepare a statement of cash flows for 2008. Assume that there were no changes in any other asset or liability accounts, and that the ending cash balance for 2007 was $50.

5) You are currently 25 years of age. You have developed a lifetime budget that includes $50,000 at age 40 for a college fund for your kids and $25,000 per year for 20 years to supplement your retirement, the first payment on your 60th birthday and the last payment on your 79th birthday. You open an investment account on your 25th birthday that promises to pay 9% interest compounded annually. You want to deposit equal annual amounts into the account every year on your birthday, starting today (your 25th birthday) and continuing until you are 40 years old (i.e., the last deposit is made on your 40th birthday). How much will each deposit have to be if you want to meet your financial goals?

Attachment:- Assesment 1 Q4.rar